Revenue based financing is a popular form of alternative business financing that provides quick and easy access to capital for small businesses that have difficulty obtaining traditional loans. The way it works is that in exchange for upfront cash, the business owner agrees to sell a percentage of future sales.
Benefits of Revenue Based Financing
Before we dive into the repayment process for this type of business cash advance, let’s look at the main benefits of revenue based financing:
● Quick access to capital: Unlike traditional bank loans, revenue based financing typically has a faster approval process, allowing businesses to access much-needed funds within a few days.
● Flexible repayment terms: Revenue based financing offers more flexibility than traditional loans, as the repayment amount is based on a percentage of daily or weekly credit card sales, rather than a fixed monthly payment.
● No collateral required: Revenue based financing is an unsecured funding option, meaning businesses do not need to provide collateral, such as property or equipment, to secure the funds. This can be particularly beneficial for small businesses that may not have significant assets to use as collateral.
● Access to smaller amounts of cash: Considering that the average small business loan according to the Federal Reserves is $663,000, many small business owners find it hard to find a bank even interested in lending a much smaller amount. Understanding the needs of these business owners, alternative funding options, such as revenue based financing, provide smaller advances.
Understanding How Revenue Based Financing Repayment Works
Revenue based financing offers a convenient and flexible way to access capital, and with any other financial transaction, it is important for borrowers to understand how it works.
The repayment process for revenue based financing is typically based on a fixed percentage of the borrower’s daily or weekly sales that is automatically deducted from the account of the business owner and is applied towards the repayment of the advance. The fixed percentage and the duration of the repayment period are agreed upon in advance and included in the terms of the agreement.
The repayment process continues until the entire advance and associated fees are collected. This means that the actual repayment period may be shorter or longer than the agreed-upon duration, depending on the borrower’s sales volume. If the borrower’s sales are slow, it may take longer to repay the cash advance, while if sales are high, the advance may be repaid sooner.
Manage Cash Flow while Repaying Your Cash Advance
While this repayment process may seem simple, there are some important things to keep in mind when repaying this type of funding. Firstly, borrowers should make sure they fully understand the terms of the advance before signing the agreement. This includes understanding the amount of the daily debit, the repayment period, and any additional fees or charges associated with the advance. Business owners should also make sure they are able to afford the daily amount and still have enough cash flow to cover their other expenses.
Taking advantage of revenue based financing requires a clear understanding of the process and the terms of the agreement. By managing their cash flow effectively and communicating with their funding provider if any issues arise, borrowers can successfully repay their advance and use it as a tool to grow their business.
Cactus Cash’ Revenue Based Financing Option Gives You Quick and Easy Access to Cash
If your business is currently in need of cash funding, Cactus Cash can help your cash flow by infusing capital into your company. Cactus Cash does not base its decision on collateral value, not on a high FICO score, and not on the size of the owner’s financial statement. Cactus Cash offers advances between $10,000 and $500,000.
Get started today – our no-cost, no-obligation application is quick and easy – decisions are typically made within a few hours of submission and if you’re approved you’ll have the cash within three business days. Find out how much cash you can qualify for today!